What's The Point?
We’ll head Down The Rabbit Hole in a few to wrap up this week’s segment but first… Morningstar had a report (If you can call it that) titled, ” Venezuela : Why the rift between it’s Communists and the Maduro government?”. It gave me hope I might learn something from the article, done by Britain’s Communist Party leader, Robert Griffiths. When I saw him refer to the Venezuela currency as the “fuerte bolivar” I was immediately skeptical (I’m usually skeptical anyway) as to the quality and “in depth nature” of his research. (The “fuerte bolivar” was replaced by the “sovereign bolivar” about five years ago which was subsequently replaced by the new or “digital bolivar”) Other than the usual Marxist rhetoric (It was not my first time reading Morningstar) the guy didn’t offer much and never answered his headline question. Allow me to do it for him…
The Venezuela Communist Party is more ideologically pure than Nicolas Maduro and his “Maduristas” (The “old school” Chavistas still cling to their Marxist roots.) After watching the Venezuela economy contract for 8 straight years under his leadership and Chavismo’s 21st century Bolivarian Socialism, Maduro did what any pragmatic Marxist dictator would do. He allowed some free market policies and the US dollar to generate a little growth while relaxing overbearing government controls, (The Chinese and Russians told him to do this years ago) creating the first signs of life in the economy of Venezuela in a long time.
This caused the Venezuela Communist Party to accuse Maduro of selling out when, in fact, he simply did what he had to do to remain safely in power. Maduro accuses the Venezuela Communist Party of lacking solidarity with Chavismo and it’s 21st Century Bolivarian Socialism and fracturing support for his party, PSUV.
At the same time both sides are fond of anti-imperialist, Castro – style rhetoric (FYI, even Castro admitted that “old school” Marxist/ Leninist Communism wouldn’t work in today’s world) and, despite their differences, Maduro is considering bringing back that old socialist/Communist favorite, price controls (responsible for much of this economic mess in the first place). That should mollify the Communists for a while. Remember, Communists are generally unhappy people who will only be satisfied when everyone is as miserable as they are….So, there you have it.
Then we have Kuwaiti Times reporting that the Venezuela Islamic School has opened in Caracas to teach the Arabic language, Islamic education, and Venezuela curriculum. It id the first Kuwaiti charitable work in Venezuela.
And we have Law 360 reporting that a forensic accountant testified in the trial of Claudia Diaz Guillen, former Venezuela Treasurer and nurse to Hugo Chavez, tying Miami-based Inter-global Yacht Sales to the massive bribery and money laundering scheme.
Law 360 also reports that in other testimony a former fashion company executive said she doesn’t remember signing the promissory note showing her signature and that of a wealthy businessman involved in the scheme. A Swiss bank was also implicated.
Then we have Investing.com telling us that the Venezuela opposition is seeking to protect the $3 billion in proposed unfrozen funds, to be managed by the UN for humanitarian relief, from creditors by keeping details of their release confidential.
Venezuela owes more than $60 billion to creditors due to nationalizations and bond defaults and creditors are lining up to get their hands on any Venezuela assets they can find, including US refiner, Citgo (subsidiary of PDVSA, Venezuela government-owned oil company) which is currently under US Treasury Department protection. Both the Maduro regime’s Ministry of Communication and the head of the opposition delegation for the negotiations in Mexico, Gerardo Blyde, declined to comment.
And we have the Peoples Gazette telling us that the conviction of Argentine Vice President, Christina Fernandez de Kirchner, on corruption charges (the evidence against her was overwhelming) is “political persecution” according to Venezuela’s President (fraudulent) Nicolas Maduro. “We express our firm opposition to the constant media and political persecution…Sooner or later the truth will prevail and the voice of the Argentine people will be respected.” Ms. Kirchner received a six year prison sentence and a lifetime ban from holding public office. Sounds like the people have spoken.
And Reuters tells us that talks between the Maduro regime and the Venezuela opposition are unlikely to resume in Mexico befor year end, according to Nico Jr. (Nicolas Maduro Guerra), son of President (dictator) Maduro, and one of the negotiators. Both sides want to see what happens with the social agreement they reached in late November for a UN-managed humanitarian aid fund consisting of almost $3 billion in potentially unfrozen assets. Skeptics (such as myself) also want to see how long it takes the Chavistas to break the sanctions relief agreement with Chevron. They’ve already signaled they’re not happy with getting no cash from Chevron’s oil exports to the US, only debt repayment.
Now, let’s go Down The Rabbit Hole…
Chapter 9/ El Dorado continued…
…Outside the area officially designated as “The Mining Arc” and the Orinoco river are the Carrao river and others as well as the Imataca Forest, the Yapacana and El Caura National Parks, and the Canaima National Park, (famous as the inspiration of Arthur Conan Doyle’s “The Lost World” and home to species found nowhere else in the world). Oh, and did I mention that the Canaima region is home to Angel Falls, the highest waterfall in the world?
The areas bordering the designated “Arc” are being encroached upon as tends to happen with these things. It’s not just the mines themselves but the environmental damage due to deforestation and pollution. In 2017, blood tests on residents along three area rivers showed 60 times the maximum allowable levels of mercury, used in metals processing.
The escalation of malaria cases is also quite concerning. Malaria was completely eradicated in Venezuelan cities in 1961 and nationwide in 1980. There were 406,289 reported cases of malaria in 2017 and an estimated over 600,000 cases in 2018. Given the government’s unwillingness to release information most people believe these numbers to be low.
There is good news/bad news regarding the benefit of “The Mining Arc” for the government. The bad news is that there is more revenue in illegal gold than revenue that finds it’s way into government coffers so this won’t be the financial savior the government hoped it would be. The good news is that it does keep some members of the military happy. The trade is lucrative enough that top military officers need to be rotated so they can share in the reported $800,000 a month in bribes.
Summary : Typical of any Chavismo project “The Mining Arc” has very little upside and a whole lotta’ downside. The government earns a few bucks although nowhere near what they need. A limited number of military officers are mollified but again nowhere near what they need. All those international companies needed to make this a thriving enterprise will never materialize. Nobody wants to partner with the Chavistas and the military’s lack of desire to control the area will keep reputable operations from participating. By the numbers, in 2003 mining accounted for 0.79% of Venezuela GDP. Since Chavismo made it a priority in 2016 mining now accounts for 0.28% of GDP.
What is being done to the Pemon people and the environment are the real story of “The Mining Arc”. In the words of then Vice President Joe Biden, “This is a big fucking deal”. Any gold sold by BCV, the Venezuela Central Bank, as well as any sold by Venezuela state-owned companies should be considered the same as “Blood Diamonds”. In the words of Def Leppard, “Baby I’m not…fuh fuh fuh foolin’!!”
That wraps up this segment of Venezuela : Down The Rabbit Hole. We’ll have more news tomorrow….
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